Will California State Lawmakers Pull the Plug on Community Energy?

On the one hand, recent energy storage mandates in the form of last year’s AB 2514 have created great opportunities to test out how advanced batteries can help mitigate the frequency and voltage issues associated with high penetrations of variable renewable energy. Utilities such as San Diego Gas & Electric have suggested these mandates plant the seeds for new microgrids building upon the utility’s success with the Borrego Springs project, which it recently announced would be expanded.

This year’s AB 2145, nicknamed by critics as the “Monopoly Protection Act,” would introduce a major kink in efforts for the San Francisco Bay Area to give local governments the authority to purchase bulk renewable energy to reduce carbon emissions. The target of the legislation is a policy vehicle pioneered in states such as Ohio and Massachusetts, but which has fanned the flames of controversy in California known as “community choice aggregation.”

What was the motivation behind creating a CCA structure? The poor track record of early retail deregulation pilot programs. Despite what polls predicted, most electricity consumers did not elect to pay more for green electricity if they are approached by one-by-one basis, typically never exceeding 2 or 3% market share. To achieve a higher economy of scale, the CCA program allows a local government to aggregate its constituents into a community bulk power purchase program. These constituents can opt out, but the experience in Marin County reveals that 80% of the customer base goes with the CCA preferred green energy program (resulting in a net reduction of greenhouse gas emissions of 19%). Adjacent Sonoma County began serving customers under its CCA program in May and San Francisco has been considering a similar CCA program for several years.

Flash forward to the present. AB 2145, sponsored by a former utility executive, has cleared the Assembly and is up for its first vote in the Senate on June 23rd. Ironically, Republicans are generally opposed to the measure (even though the status quo implies greater governmental intervention to reduce carbon) while key support to this measure is being provided by Democrats (who are aligning with utility union workers). While Pacific Gas & Electric’s efforts to derail Marin County’s CCA via a statewide ballot measure failed in 2010, the utility is a key force behind AB 2145. The opponents include local governments as well as Silicon Valley.

Interestingly enough, another bill designed to more directly pave the way for microgrids in California by modifying the so-called “over the fence” rule (PUC Code 218) -- and which requires a power provider to become a utility if one send electricity over a public right of way – was killed. A recent California Public Utilities Commission white paper identified this regulatory policy as one of the key impediments frustrating California’s efforts to become the world’s best market for microgrids.

My interest in a distributed energy future was sparked because I was given a grant to investigate whether the CCA structure could help accelerate new clean energy business models such as microgrids. Then, working with Navigant Consulting and others, we pulled together a subsequent $2 million grant proposal to create a microgrid incorporating a wind turbine, biogas and rooftop solar PV, with a community center in Point Reyes Station that served as a disaster shelter as an anchor critical load. The proposal was 7 minutes beyond the deadline at the California Energy Commission, but I was hired shortly thereafter to do Navigant Research’s first microgrid study in 2009.